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Women urged to invest in pension

Women are falling far behind men with their pension pots (Image: GETTY STOCK)

A WEALTH of research suggests women make better investors than men, yet they have smaller pensions and investment pots. One reason is that women earn less than men, particularly if they interrupt their careers to raise a family or care for an elderly relative and fall behind in the pension stakes.

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Professor Neil Stewart at the Warwick Business School said women do better because they trade less and incur fewer charges and take fewer risks: “Men are also drawn to the thrill of investing and pick more speculative stocks, women take a more long-term perspective.”

Plenty of other research has come to the same conclusion.

Hargreaves Lansdown recently found its women customers’ portfolios increased by 0.81 per cent more a year on average.

“They are often held back by a concern they don’t have in-depth knowledge,” she said.

Women are falling far behind men despite their superior skills, with those who have converted their pension savings into income drawdown at retirement facing a 37 per cent shortfall compared to men in the same position, according to insurer Zurich UK.

Men in drawdown have an average pension pot of £212,000, which at a 3 per cent yield, secures an annual income of £6,360.

Women have an average pension pot of £132,000, equating to an income of just £3,990, or £2,370 less per year.

As women typically have a higher life expectancy, they need to stretch out their pot for longer.

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Zurich savings expert Rose St Louis said the gender pension gap is not just down to the pay gap or career breaks, but also to women paying less attention to their pensions.

She said: “If you are less engaged with your pension you are at risk of making poorer decisions that could result in a lower income, or even outliving your savings. Seeking financial advice could be essential.”

Fidelity estimates that younger women could close the gender retirement savings gap by dedicating an additional 1 per cent of their salary towards their pension, on average just £35 per month.

However it said more than half do not know where their pension is invested, while more than a third do not know how much it is worth.

Fidelity investment director Maike Currie said women live longer, earn less and are more likely to take career breaks or work part-time.

“Many also prefer the perceived safe haven status of cash but it provides lower returns over the longer run. To close the gender pension gap, women need to get invested,” she added.